9911796707
TMI Blog1989 (1) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... The trust property originally consisted of Rs. 1,000 only but it was augmented by other contributions. These funds were invested in a business. The Trust was running that business. 2. Guardian and father of the assessee minor filed his return showing an income of Rs. 20,8409 on 12th Aug., 1983. In that return the assessee claimed to set-off the business loss of Rs. 19,443. The trust to which we have referred to above, had incurred some losses in the business and the share which fell to the minor was Rs. 19,443. This was claimed to be set-off against the other income of the minor. The ITO computed the total income of the minor at Rs. 58,073 ignoring the loss of Rs. 19,443. He pointed out that this was a share of loss from the trust where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 concerns only with positive income and not with losses, he referred to the decision of the Supreme Court in the case of CIT vs. J.H. Gotla (1985) 48 CTR (SC) 363 : (1985) 156 ITR 323 (SC) and submitted that the expression 'income' would also include losses. Now, he submitted that the assessment has to be made in the hands of trustees "in the like manner and to the same extent". That will apply to losses also. He finally submitted that the assessee is a minor and in any case, if there is any doubt as to the correct legal position, the benefit must be given to the assessee. 6. Shri Sethuraman, for the Department, submitted that there is a lot of difference in the procedure of assessment in the case of beneficiaries and trusts. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the beneficiaries were known and shares of the beneficiaries were determinate and hence trustees should be assessed under s. 21(1) of the WT Act. It was also submitted that if the value of the life interest of the beneficiary was included in the total wealth of the beneficiary himself a corresponding deduction should be allowed in the assessment of the trusts while determining the net wealth of the trusts. The WTO held there was no provision for such a deduction. The AAC, however, accepted the assessee's contention and the matter came before the Tribunal. The Tribunal accepted the Revenue's contention and held that no deduction could be allowed. The High Court had held that once the trustees were assessed, it was not open to the Revenue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady brought to tax in the hands of the beneficiary, as part of the total income of the trustees for determining the rate of tax in respect of the other income of the trustees." The above headnotes make it very clear that once the ITO brings to tax the income in the hands of either the trustee or the beneficiary, the same income cannot be brought to tax in the hands of the other person. Now Sri Venkatesan had submitted that the term income would include losses also. Keeping this in mind we can read this sentence in the headnotes as follows. "The mode of assessment provided under ss. 161 to 166 of the IT Act is alternative to each other and once the ITO allows a loss in the hands of either trustees or the beneficiaries same loss cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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